Correlation Between Gatos Silver and Mitsubishi Chemical

Can any of the company-specific risk be diversified away by investing in both Gatos Silver and Mitsubishi Chemical at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Gatos Silver and Mitsubishi Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gatos Silver and Mitsubishi Chemical Holdings, you can compare the effects of market volatilities on Gatos Silver and Mitsubishi Chemical and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Gatos Silver with a short position of Mitsubishi Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gatos Silver and Mitsubishi Chemical.

Diversification Opportunities for Gatos Silver and Mitsubishi Chemical

0.74

Correlation Coefficient

Gatos Silver  Mitsubishi Chemical

Poor diversification

The 3 months correlation between Gatos and Mitsubishi is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and Mitsubishi Chemical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Chemical and Gatos Silver is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Gatos Silver are associated (or correlated) with Mitsubishi Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Chemical has no effect on the direction of Gatos Silver i.e., Gatos Silver and Mitsubishi Chemical go up and down completely randomly.

Pair Corralation between Gatos Silver and Mitsubishi Chemical

Given the investment horizon of 90 days Gatos Silver is expected to generate 17.82 times less return on investment than Mitsubishi Chemical. In addition to that, Gatos Silver is 1.4 times more volatile than Mitsubishi Chemical Holdings. It trades about 0.01 of its total potential returns per unit of risk. Mitsubishi Chemical Holdings is currently generating about 0.33 per unit of volatility. If you would invest  483.00  in Mitsubishi Chemical Holdings on October 26, 2024 and sell it today you would earn a total of  74.00  from holding Mitsubishi Chemical Holdings or generate 15.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	77.78%
Values	Daily Returns

Gatos Silver  vs.  Mitsubishi Chemical Holdings

Gatos Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gatos Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Mitsubishi Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsubishi Chemical Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Gatos Silver and Mitsubishi Chemical

The main advantage of trading using opposite Gatos Silver and Mitsubishi Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gatos Silver position performs unexpectedly, Mitsubishi Chemical can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Mitsubishi Chemical will offset losses from the drop in Mitsubishi Chemical's long position.

The idea behind Gatos Silver and Mitsubishi Chemical Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.